AUSTIN, TX--(Marketwired - Mar 20, 2015) - Crowdfunding PR announced at the South by Southwest (SXSW) that the firm has rolled out a new crowdfunding consulting service for universities and colleges nationwide that want to setup an equity- or rewards-based crowdfunding site to help finance entrepreneurship centers, co-working spaces, incubator mentorship programs and accelerator seed stage investment funds.
Universities, colleges and trade schools can benefit from:
- Building a Rewards-based and/or Equity-based Crowdfunding Ecosystem;
- Providing Easy Access to Seed Investment Capital for Startup Companies;
- Generating More Revenue to Support Co-Working Spaces and Entrepreneurs;
- Using Equity Crowdfunding Sites to Finance Incubators and Accelerators;
- Taking Advantage of Investor Syndicates that Need Frequent Deal Flow;
- Splitting Revenue with Incubator and Accelerator Mentor's Consulting Fees;
- Streamlining University Technology Transfer Offices (TTOs);
- Cross-Pollinating College Education with Real World Startups; and
- Learning How to Build Better Relationships with Alumni and Angel Investors
Rewards-Based Crowdfunding
Following a similar business model used by Kickstarter and IndieGoGo, schools or a small group of enterprising students can now setup their own rewards-based crowdfunding site and use it to generate revenue by collecting crowdfunding site commissions from crowdfunding campaigns that are launched by students, faculty members and/or local startup businesses.
Running just ten successful $100,000 rewards-based campaigns per month with a 5% site commission fee would generate $600,000 per year in gross revenue that could be used to fund a wide variety of school projects such as co-working spaces, incubators, and accelerator programs.
Equity-Based Crowdfunding
If the university sets up an equity crowdfunding site with a broker dealer that is registered with the SEC, the university and its students, faculty, mentors, angel investors and 8.7 million other U.S. accredited investors can all buy equity shares in the university's promising new startups and earn significant revenue upon exit.
Investment Syndicates
A popular new way for angel investors or accredited investors to invest in startups is to setup an investment syndicate. If and when an investment company is bought out or issues an Initial Public Offering (IPO), the investment syndicate is paid via a carried interest (carry), which is usually around 20% of the gross profit when the exit is made.
Non-Accredited Investors
In fourteen states including Alabama, Georgia, Idaho, Indiana, Kansas, Maine, Maryland, Massachusetts, Michigan, Oregon, Tennessee, Texas, Washington, and Wisconsin, universities and colleges can also raise money by selling equity shares to non-accredited investors. And by the end of 2015 another 16 states will most likely have crowdfunding intrastate exemption legislation signed into law.
In Texas alone there are 20 million non-accredited investors. In all states with pending or legal legislation there are 175.6 million non-accredited investors that may soon be able to invest up to $5,000 per company in equity crowdfunding deals. This will generate a potential pool of $878 billion in seed stage investment capital that will be available to help launch new startup companies.
There are also rumors that the SEC will finally pass the nationwide equity crowdfunding rules in May 2015. This means that by the end of 2015 hundreds of millions of new investors will soon be able to invest in university and college accelerator programs for schools that make the option available.
Crowdfunding: a Powerful Marketing Tool
In order to tap this new pool of seed investment capital, college, universities and even trade schools need to setup an online equity crowdfunding site before the national guidelines are approved. As crowdfunding campaigns come online, campaign managers will spend a significant amount of money on crowdfunding marketing campaigns in order to drive potential investors to their fundraising profiles.
Potential investors will read the news stories about one or more great investment opportunities and then be driven to a school's crowdfunding site where they can browse through crowdfunding profiles on a 24x7 basis from anywhere in the world. Marketing will open the window for a global audience to get an inside look at the technology, business development and investment opportunities that are being spawned by the university's technology transfer and commercialization process.
Return on Investment
Most startups require $100,000 of seed investment capital. A second round might raise $1 million. But eventually after several years of hard work, a small company's private shares purchased at $5 might turn into a $50 public stock. For a startup with a million shares, this would generate around $45,000,000. With a 20% carry, the deal would pay out $9,000,000 to the original seed stage investors. Just ten successful deals per year might yield $90,000,000 for a school's fundraising foundation.
How Big is the Market?
The Top 100 Crowdfunding Sites are generating approximately one million crowdfunding campaigns per year. Over $20 billion in crowdfunding transactions will occur in 2015 -- a 100% increase over 2014 -- according to EquityNet. A World Bank research report also estimates that, by 2025, this number will grow to be more than $300 billion annually, while others estimate the figure might be as high as $500 billion, with a resulting economic development impact of $3.2 trillion.
How to Get Started
Any trade school, college or university that has an interest in exploring the options for creating a donation-, rewards- or equity-based crowdfunding platform should contact Crowdfunding PR and setup a consulting call to speak with a crowdfunding expert. Interested parties can learn more by visiting http://CrowdfundingPR.wordpress.com, sending a Twitter message to @Crowdfunding_PR or calling Robert Hoskins at (512) 627-6622.
Contact Information:
Contacts:
Robert Hoskins
Front Page PR
512-627-6622
@Crowdfunding_PR